Social Security and Medicare for Baby Boomers

The Social Security Act of 1935 established retirement benefits for workers, for the handicapped, and for victims of industrial accidents. Payroll deductions taken under the Federal Insurance Contributions Act (FICA) provide the funding for Social Security. The age for retirement was originally 65 years of age, but as life expectancy in the United States continues to increase, and the sources of funding for Social Security continue to dwindle, the retirement age is being gradually extended. People born from 1943 to 1954 will qualify for retirement at age 66. Those born after 1960 will not get a full pension until age 67.

According to the Center for Health Statistics, the average life expectancy in the United States is approximately 78 years. This means that retirement income should be able to sustain you for at least 10 years if you were to die at the average age, but you are likely to live much longer than that with modern medical interventions. Social Security and individual retirement accounts (401K) are supposed to provide the funds to meet your expenses when you no longer work, but Social Security is in trouble.

One of the problems with Social Security is the uneven population growth known as the post-World War II "baby boom" between 1946 and 1964. The large population of boomers started using birth control and had fewer children who could fund Social Security. This means that Social Security will run out of money. The trustees of the fund estimate that by 2017 the revenue collected by Social Security will be less than what is needed to pay the beneficiaries. If Social Security then starts using its surplus reserves, the reserves will be exhausted by 2041. Medicare, which provides medical benefits to retirees, will start going negative in 2013 and will consume its reserves by 2019.

The United States is heading toward a crisis in social services and health care in ten years. The traditional services that serve our seniors today may not be available to those who were born after 1954. What are you going to do about it?